A senior lettings chief says the supply drought is making the rental market as overheated now as at any time in the past two decades.
Kate Eales, head of regional agency at Strutt & Parker, says: “In my 20 years in the industry, the current lettings market is as overheated as I’ve seen.
“With a substantial withdrawal of private rental sector stock, at an estimated 300,000 units, there’s been a rise in stiff competition from those who are seeking property across all parts of the UK and a subsequent hike in rents achieved.”
Eales comments come as Strutt & Parker forecasts good time ahead for its main market t- the niche Prime Central London landlord.
Following five-years of declines or stagnant growth, Strutt & Parker’s latest housing market forecast reveals the Prime Central London rental market is set to grow by up to 10 per cent in 2022, in response to soaring demand from tenants against a shortage of available properties.
In Q1 2022, the average rent in PCL rose by 3.3 per cent, outstripping the rate of growth in the sales market and marking the fourth consecutive quarter of upward rises.
Annual growth reached 10.7 per cent to Q1 2022. This has been driven by a growing supply-side shortage; transactions have suffered a 42 per cent fall year-on-year for the second successive quarter.
Rents have increased most significantly in the one and two bedroom sector of the market, the same sector most heavily impacted by rent reductions during the pandemic.
With international tenants returning, and a lack of supply across all brackets, some homes are achieving up to 25 per cent higher rents today compared with the start of 2021.
Louis Harding, head of London Agency at Strutt & Parker comments: “The PCL rental market is facing an even more acute shortage than the sales market. This is a symptom of tenants renewing contracts in the wake of a lack of suitable sales stock, and a depleted level of property re-entering the lettings cycle.
“We have also seen a wave of would-be tenants returning to the city as pandemic restrictions have lifted, while some buyers are biding their time in the rental market to see how the current economic situation may affect the sales market, both adding further pressure.
"Bidding wars for the best rental homes are now common place, rather than a rarity.
“Two years ago landlords were making bold concessions to retain and attract tenants including rent reductions and generous break clauses. Today it’s the tenants making concessions: committing to longer contracts and, in some instances, offering significant amounts of rent up front.”